The Payroll Outsourcing in Project Management - Essay Example

PROJECT MANAGEMENT PAPER Project Management Paper Affiliation Construct a Cost-Benefit Analysis matrix for an organization that is considering replacing its internal payroll system with a payroll outsourcing service. Include direct and indirect revenue enhancements and direct and indirect cost reductions. The Payroll outsourcing is an increasing phenomenon in the last decade, where most of the HR services are subcontracted for a number of reasons (Lilly, Gray, & Virick, 2005). The payroll system is an internal process to firm, which is important to enhance the value of an organization (Seth & Sethi, 2011). Thus, it is important to evaluate outsourcing of Payroll System with the help of a cost-benefit analysis. Literature has suggested a number of benefits which can be achieved by outsourcing the payroll system. Majorly, it is considered to outsource in order to achieve the cost reduction benefits, where the exceptional contractor’s performance and its low-cost structure can reduce the cost directly, as well as it converted the fixed cost into the variable costs and also by lowering the in-house staff (Seth & Sethi, 2011). Other indirect benefits resulting in the cost reductions are increasing efficiency by more focus on main business operations, employee retention with specialized programs designed strategically by vendor, bettered the risk management, and also minimizing the firm’s politics (Turnbull, 2002; Rubery, Cooke, Marchington, & Earnshaw, 2003). The outsourcing Payroll system has some other benefits resulting in revenue enhancements. The direct revenue enhancement occurs through more cash generation and savings, which is achieved by transferring the assets needed to manage payroll towards the vendor, so it lowers the investment and make the resources available for further purposes (Seth & Sethi, 2011). While it also increases the revenues indirectly by improving customer services and satisfaction resulting in increased sales, gaining more contacts through vendor PR, speeding up, expansion, legal compliance and also by accessing the advanced technology through vendors’ specialized services (Adler, 2003). On the other hand, there is little evidence found in literature to realize these benefits. As (Dickmann & Tyson, 2005) has argued that there are more costs incurred while outsourcing the payroll system due to more transaction costs. Additionally, according to (Mellewigt, Madhok, & Weibel, 2007), there is an ethical issue of payroll outsourcing, which is the critical employee’ information security breaches. Moreover, the lower control over HR functions, uneasy access to employee data, disintegration issues, and also employees’ dissatisfaction can be the source of more costs (Thomas & Thomas, 2011). Though, there are number of efficiency, cost reductions and revenue enhancement benefits by outsourcing, but it is not free from other costs and disadvantages. Thus, the implementation of a new payroll system should be properly executed. Assess the risks associated with integrating a new payroll system and suggest what the project management team can do to minimize those risks. There are a number of risks associated with the implementation of the new payroll system in the organization, which must be accessed and a mitigation strategy should be developed by the project team. As there is need to replace the older payroll system by integrating this with the new system, so the risks can be associated with two factors; system based or the user based. The system based risks involved in the integrating new payroll are the compatibility risk, misalignment of the new system with the business process, the risk of losing control, and the risk with the complexity of the project (Grabski, Leech, & Lu, 2001). These can be mitigated by the project team, where they need to access the compatibility and its alignment with process before choosing the vendor, a separate committee having authority of making decisions can minimize the control risk (Davenport, 2000), and a skilled project team can reduce the complexity. The user-related risks are more difficult to handle, where the employees may pose threats of lack of ability and expertise to integrate the new system, and resistant to change when the employees are not willing to adapt the new system. These two risks can be mitigated by developing a proper training and development program for employees’ learning, and by applying change management techniques and good leadership skills to minimize the risks of expertise and resistance respectively (Grabski, Leech, & Lu, 2001). Employees; resistance to change is the crucial one, which must be mitigated through effective communication and win their agreements through explaining the benefits of the new system. After assessing and developing the mitigation strategy for risks with new payroll system, a project schedule can be made in order to plan the implementation plan. The activities which are needed to be performed are; planning the project (team assembled, training, assessing resources and information), setting objectives and scope, project costs and performance measures, developing and evaluating list of vendors, checking the compatibility of system, choosing a vendor, negotiating terms setting, end-user’s training, new payroll system integration, assessing the performance, and controlling the activities and resources (Seth & Sethi, 2011). The project schedule can be developed through a number of project tools, such as Gantt charts, PERT network, and CPM tool. All three have their own pros and cons. Compose the tasks that would be needed to complete a Gantt chart (project schedule) for outsourcing the companys payroll system. Compare the advantages and disadvantages of using a Gantt chart versus using the Performance evaluation and review technique (PERT) and critical path method (CPM) when managing projects. The Gantt chart is made with the proper activity defining, their start and end times, which is considered as an effective visual tool for managing the project. It is easy and flexible to develop and analyze, and also allow to assess the project performance in real time period, even for large projects (Kumar, 2005). But it has a disadvantage of not addressing the costs and resources of the project, and also the project scope and size of other activities. This lack of comprehensiveness causes difficulty to assess the cost, and also there is need to take much care of updating information in Gantt chart (PMBOK guide, 2006). While on the other hand, PERT network provides comprehensive details of the activities performed, their time, costs, resources, and also the responsibility of performing activity. It can better assess the project completion date, and need for costs and resources. But it lacks simplicity and requires a professional training, and better for large projects and iterative processes. Lastly, CPM method is beneficial for the critical path calculations, where the critical activities can be assessed and has to be completed in time, and also it can provide benefits of using the slack time for another activity. But the disadvantage of CPM is that it does not consider the resources and their allocation (Acuña, 2010). Propose three types of feedback loops the project management team can implement so that potential users of the new payroll system can provide advice, suggestions, and guidance to the team during project development and implementation. Suggest how the project management team can filter out irrelevant information and target critical information provided by potential users of the new system. While implementing the new system, it is important to involve the potential users in the process by the use of feedback loops, which can allow them to participate more and committed to implement this system effectively. Firstly, the project team can employ a suggestion box, where all the issues and suggestions from the employees’ side can be presented to them in written form, which will be the effective way to get the accurate information. Secondly, an employee representative can be selected and assigned to perform this task, where the representative will be getting the suggestions and complaints from employees and will reveal those to the management by attending their meetings. It will be helpful in making suggestions through an intermediary person for those who hesitate a direct contact. Thirdly, a Help Desk is a well-known technique in this regard, where every employee is being listened and responded with an appropriate solution. It can act as the focal point of information. Suggest three types of behavioral problems that employees can manifest as a result of replacing the organizations legacy payroll system with an outsource solution. Compose three guidelines that a project manager can use to mitigate employee resistance to change. The information provided by the employees can be of different kinds, it may be critical to the project or it may be quite irrelevant. It is important for the project team to extract the most relevant and critical information for the project in order to process that in system integration or project management. In this regard, the Imp-Act (2003) has suggested some recommendations for analysis, where the project team must consider the source of information, its criticality, the level of issue, the reason behind the cause of this issue and also the financial and social impact of information while analyzing the feedbacks (Imp-Act, 2003). Another important concern in the implementation of a new payroll system is the employees’ behaviors towards this change. In this dynamic environment, the organizations have to cope with the changing in its surroundings, where the managers have to implement some strategies to make the employees willing towards these changes. Usually, when the change happens then employees show different behaviors, which can be categorized as three behaviors; employees’ anxiety, adopting the change, but without willingness, and resist change through performing deviant behaviors. All of these three behaviors can cause much effect on the project implementation and the system effectiveness, which in turn affect the overall organizational performances. If the employees adopt the change without willingness then they would not be able to perform, while resisting change can be worse, as they may show deviant behaviors, such as sabotage, absenteeism, gossiping, striking, and physical violence (Agboola & Salawu, 2011). In this regard, there is a requirement of change agents and good leadership skills to make the employees willing towards the change. There can be three strategies to be suggested to overcome these behaviors. Firstly, the managers must provide a psychological security to the employees, where they should try to assist employees in overcoming their anxiety feelings through considering and attending the employees’ requirements. Secondly, the Unfreezing technique can be employed, where the managers allow the employees to view and believe in the changed system by proposing them a recognition and reward schemes (Graetz, Rimmer, Lawrence, & Smith, 2006). Thirdly, the project manager can alter the behaviors of employees through “transition process”, where they counsel with employees and show them the advantages and benefits of the new system over the old one. References Acuña, R. (2010). Analysis of Project Planning using PERT and CPM. New York: Department of Computer and Mathematical Sciences. Adler, P. S. (2003). Making the HR outsourcing Decision. MIT Sloan Management Review, 45(1), 53-60. Agboola, A. A., & Salawu, R. O. (2011). Managing Deviant Behavior and Resistance to Change. International Journal of Business and Management, 6(1), 235-242. Davenport, T. (2000). Mission Critical: Realizing The Promise Of Enterprise System. Boston: Harvard Business School Press. Dickmann, M., & Tyson, S. (2005). Outsourcing payroll: beyond transaction‐cost economics. Personnel Review, 34(4), 451- 467. Grabski, S. V., Leech, S. A., & Lu, B. (2001). Risks and Controls in the Implementation of ERP Systems. 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